Women in Forex trading and the benefits of bridging the gender gap

With online trading platforms, opening the doors to the trading industry for more diversity, there is still lack of representation of women in Forex trading.

Women in finance study from 2018 found that not only women are misrepresented at all levels of the global financial system, but women make up less than 2% of financial institutions.

The study stated:

Narrowing the gender gap would foster greater stability in the banking system and enhance economic growth. It could also contribute to more effective monetary and fiscal policy.

With only 10% of the UK online trading market, women traders have been rare with even fewer representations historically.

However, statistical evidence collected by Warwick Business School in 2019 suggests that women traders outperform men by 1.8%, although they trade less than them.

One study shows that women are more likely to choose Forex trading over any other trading style. Day trading and CFD trading follow on second and third place. Generally, women are less likely to take risks than men and these trading types have been shown to have high risks involved. However, the preferred trading styles is very similar between women and men with 30.71% of men choosing forex trading and 29.46% of women.

Women in Forex trading

Women’s tendency to avoid risk and willingness to admit when they need more knowledge or information to deal with a situation are the very things that makes them ideal traders.

Mark Carney, Governor of the Bank of England said in June last year at the Women in Banking and Finance Annual Awards in London:

Finance offers so much, but it still doesn’t offer enough for women.

This is especially striking as more women than men start out in financial services, only for their representation to diminish steadily through the ranks.

He added:

This is an enormous missed opportunity.

Some studies suggest that on the trading floor, women can reduce crash events and their risk aversion often results in more cautious strategy. Women traders do not over-trade, do not take excessive risks and as a result show greater long-term gains.

In general, women have less of an ego than men which makes them better at dealing with losses. Where men would meet losses defensively, women traders are more likely to look at them with an investigative eye and learn how to avoid them.

Even though women are generally considered more emotional, in trading they exhibit less emotional connection to gains or losses than men. Profits usually do not drive women into a state of euphoria which makes them more likely to make take reasonable decisions and save the profits, rather than to spend them.

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